Andhra Bank net falls 50% as farm loan NPAs rise

Andhra Bank has reported a 53.74 per cent decline in net profit at Rs 107 crore for the quarter ended June, reeling under the impact of the non-performing agriculture loan portfolio in Andhra Pradesh and Telangana states in addition to a rise in overall expenditure. The net profit in the year-ago period stood at Rs 231.28 crore.

Sequentially, the net profit numbers show a marginal improvement over those of the fourth quarter ended March, as the impact of provisioning was greater in the last quarter.

The bank’s total income during the quarter under review grew 9.10 per cent at Rs 4,205.06 crore as compared with Rs 3,854.16 crore while the expenditure went up by 15.15 per cent to Rs 3,578.79 crore from Rs 3,107.98 crore. Provisioning and contingencies saw an increase of 7.6 per cent at Rs 414.27 crore as compared with Rs 384.90 crore in the corresponding quarter of the previous year. Chairman and managing director C V R Rajendran said the bank had to take a Rs 470-crore hit from the newly added agriculture NPAs from the two states whose governments had promised a loan waiver. About Rs 1,026 crore in crop loan advances turned NPAs in the quarter under review even as the bank had to reverse Rs 304-crore interest booked on these loans besides making provisioning of Rs 160 crore towards fresh agri-NPAs.

“Of the Rs 1,026-crore fresh agriculture NPAs, we have thought of considering Rs 686 crore loans as standard assets since these loans are expected to be covered by the loan waiver schemes announced by the Andhra and Telangana governments. We have decided against such a move as the bank has not received any communication from the governments on the waiver,” Rajendran said. He added the Reserve Bank of India was not going to give permission for farm loan restructuring in Andhra Pradesh in the light of a good rabi season last year. The regulator was expected to take that stand for loans nationwide, he said.

Concentration in Andhra Pradesh to be reduced
Rajendran said the bank had decided to reduce the risk of over-exposure suffered on account of the ongoing farm loan issues in Andhra and Telangana by spreading future loans across states. At present, almost 90 per cent of the Rs 21,000-crore crop loan portfolio of the bank is concentrated in just Andhra Pradesh (Rs 13,000 crore) and Telangana (Rs 7,000 crore).